If you have car insurance, you most likely know that there are several car insurance coverage options available. Understanding what they all mean can help you in the event of an accident. You’ll know exactly what your insurance company will and won’t cover, and this can remove any nasty surprises you could get if you don’t understand your insurance. We’ll quickly go over everything you need to know below.
Five Car Insurance Coverage Options
A lot of states require that you carry more than one of these coverage options or complete coverage, but it varies from state to state. You can contact your local insurance agency to see what your particular state requires you to have.
Collision and Comprehensive Coverage
If you purchased a car and used a company to finance it or if you leased a vehicle, the lienholder will require you to have comprehensive and collision coverage. Once you pay your vehicle off, both of these coverage types usually become completely optional.
Collision coverage is exactly what it sounds like. If you damage your car by colliding with an object or another vehicle, this coverage will help you replace or repair it. Collision coverage will help cover the costs to protect your car. Still, property damage liability will help pay for any damage you cause the other person’s vehicle if you cause the accident.
If you have comprehensive coverage, you have insurance that will help pay to replace or repair your vehicle if someone steals it or it gets vandalized. It also covers animal damage and things like hail. Both types of coverage come with limits and deductibles. The limit will dictate the maximum amount of money your insurance company will payout in the event of an accident. The deductible is the amount of money you have to pay out of your pocket before your insurance benefits kick in and pay anything.
One of the most popular coverage options you have is liability. You can split it into property damage liability and bodily injury liability. If you get into an accident, bodily injury liability will help cover the medical costs for the other person. If you damage another person’s property during an accident, property damage liability will help pay for it.
Every state will set limits on the liability coverage your insurance must offer. The insurance coverage will outline the maximum amount they’ll pay for property damage, bodily injury per person, and bodily injury per accident. You can go above and beyond these requirements and buy an insurance policy that offers higher liability coverage maximum caps. You’ll pay higher premiums doing this, but it’ll offer you more protection in the event of an accident.
Personal Injury Protection and Medical Payment Coverage
Having coverage for any medical payments are optional, but many insurance companies will recommend it. Medical payment coverage will help to pay for the cost of your or any passenger’s medical expenses they incur after an accident like emergency room visits, x-rays, or surgery. It doesn’t matter who caused the accident with this coverage option.
Another coverage option you have is personal injury protection. This isn’t available in every state, but some states do require that you carry it. This coverage works very similarly to medical coverage. As long as you have a covered loss and need medical treatment, this coverage can kick in and help pay for the medical costs. It can also potentially cover other expenses you have while you recuperate from the accident like lost income or childcare expenses.
This is optional insurance coverage. If you choose to have this coverage, your insurance company will help to pay for the cost of renting a vehicle while a shop fixes yours after a covered event. Check with your insurance company’s limits with rental reimbursement coverage. It usually comes with a set number of days and a specific dollar amount they’ll payout per day.
Uninsured or Underinsured Motorist
If you have uninsured motorist coverage, your insurance will protect you if you get into an accident with someone who doesn’t have insurance. Normally if you sustain injuries in an accident that the other person causes, their liability insurance will help to pay for any medical expenses you incur. However, this won’t happen if the driver that caused the accident doesn’t have auto liability coverage. If this happens, your uninsured motorist coverage would kick in and help pay for any medical expenses you rack up in response to the accident.
If you have underinsured motorist coverage, it works the same way. If the other driver causes the accident has insurance with liability coverage that has lower limits than will trigger your state’s underinsured motorist coverage to kick in and pay, your coverage will pick up the costs. You do want to check with your state’s limits and insurance requirements about this coverage, so you’re not stuck with huge medical bills.
Car Insurance Coverage – Frequently Asked Questions
1. Is there a such thing as full coverage?
Technically, there is no such thing as getting full coverage with your car insurance. However, you can customize your policy by picking and choosing which coverage options you want to have to help protect yourself and your passengers in the event of an accident.
2. What is a car insurance deductible?
The deductible is the set amount you have to pay out of your pocket before your insurance company will pay for a covered accident or loss. Popular deductible amounts range from $500 to $1,000. The higher your deductible is, the lower your premium will be.
3. Can you change your coverage?
Yes. Many insurance companies allow you to change your coverage options any time you like before an accident. You can contact an agent or log into your account and look at your policy. You’ll see an option to make changes and pick the date you’d like the changes to go into effect.
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